DRUG DEAL TAXES FADE AWAY IN SOUTH CAROLINA

Required Stamps Once Raised More Than $31,000

COLUMBIA --- In South Carolina, even drug dealers are expected to pay
taxes. Perhaps more surprising: Some of them do.

Or at least they used to. The Department of Revenue collections from
the Marijuana and Controlled Substance Tax Act has evaporated to
almost nothing during the peak recession years.

The last fiscal year brought in just $149 from people purchasing an
official stamp to place on their products or to add to their stamp
collections.

Compare that with two years earlier, when the department collected
$31,847 from the tax, the bulk of the nearly $43,000 total since
fiscal year 2005-06. State law requires the revenue to be credited to
the state general fund.

The department did not provide any possible explanation for the steep
decline in revenue.

Under state law, if someone is caught selling drugs without an
official tax stamp, the penalty is payment of 200 percent of what was
owed in taxes and up to five years in prison, a $10,000 fine or both.

Since its creation nearly 20 years ago, South Carolina's law has
survived a legal challenge on the grounds of double jeopardy in
McMullin v. South Carolina Department of Revenue, according to the
National Organization for the Reform of Marijuana Laws.

Dealers are not required to give their name, address or Social
Security number on the payment form.

"One justification for taxes is that in return for submitting to
taxation, payers receive the benefits of property protection, courts
and so forth," said Richard Morrison, a communications manager for the
Washington-based Tax Foundation. "Drug excise laws are at odds with
that view, since taxpayers still get no legal protections."

He said Arizona was the first state to enact a drug excise tax in
1983. It was repealed in 1997 after a double-jeopardy challenge in
which the taxpayer had purchased necessary stamps but was still
arrested for drug violations.

"It's also just another example of states targeting some unpopular
practice for punitive easy taxation, allowing the majority to consume
more government services than they're willing to pay for," Morrison
said.

[Sidebar]

Drug tax rates Revenue collected from South Carolina's Marijuana and
Controlled Substance Tax Act, which was enacted in 1993, has dropped
off suddenly in recent years.

The law sets three rates: $3.50 for each gram of marijuana, $200 for
each gram of a controlled substance and $2,000 for each 50-dose
quantity of a drug not sold by weight.

- -- Morris News Service